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Market Recap: Friday, June 5

All three major indices closed in the green after Friday’s trading session, influenced heavily by the May jobs report which posted surprising, positive signs with 2.5 million jobs added. The Final Round panel discusses the latest.

Video Transcript

SEANA SMITH: Welcome back to "The Final Round" here on Yahoo Finance. We're just under a minute from the closing bell. And we have quite a rally on our hands, the Dow up over 850 points. The S&P and NASDAQ also up well above 2%. Now, of course, the massive rally coming on the heels of that jobs report that we got out before the bell this morning, 2 and 1/2 million jobs added to the economy in the month of May, really surpassing the expectation. The expectation was actually for a decline of 8 million. So we have a huge rally. A lot of the stocks tied to the reopening leading the way today.

[BELL RINGING]

And that was the closing bell on Wall Street. Again, the Dow closing up over 850 points. Leading the way here sector-wise, energy was the biggest winter followed by financials and industrials. All 11 of the S&P sectors closing to the upside. Energy by far the leader in today's market, up over 6 and 1/2 percent.

For more on this, I want to bring in my co-host Myles Udland. And Myles, it's interesting because we talked about this jobs report yesterday, your expectations for it. I don't think any of us would have guessed this 2 and 1/2 million gain that we did see this past month. But I think a lot of economists are trying to figure out just exactly what this means, how much we should trust this number, and where we go from here.

MYLES UDLAND: Yeah I mean, look as Neil Donough outlined just a few minutes ago, like, basically economists-- and I think I read like a dozen notes ahead of this report. They just went through and added up all the initial claims data. And said, oh, so we'll probably lose 7 and 1/2 million jobs. And the unemployment rate will go to basically 20%.

I think what, you know, today's report shows is there were a lot of people brought back to work. Now, we've still only recovered a small fraction of the jobs that were lost, definitively lost, you know, between mid-March and the end of April. And we still have an unemployment rate that's north of 13%. That's still the highest that we've seen in several decades here in the US. And so it's not like the situation is great.

But there are certainly questions now about what shape-- and I'm not talking about the letter. I'm just saying to what extent do we see employers-- or employees actually maintain ties with their employer through this time. Maybe there is a sense that some businesses that came under serious duress remain under duress are not just going to fold up and, say, throw in the towel, right? There might be some more resilience perhaps, I guess, in the economy than it seemed-- than seemed possible, you know, kind of in those darkest days mid-April.

SEANA SMITH: Yeah, there might be. And I think this also leads to the question as to, in terms of where we go from here, how much more assistance is needed. And Rick, we've talked about the fact that Congress and also the Fed has done so much already and whether or not they should hold off on further stimulus, whether or not they should do more. We just heard Neil Donough in the last hour saying that he doesn't think they're off the hook yet.

But it's interesting then we've got the comments from President Trump shortly after that report this morning, basically saying that he is calling for more economic stimulus and also wants to include a payroll tax cut.

RICK NEWMAN: Right, so President Trump wants as much stimulus as he can possibly get because he's going into re-election in five months. And he would like to juice the economy as much as he possibly can. I think any president would feel that way. Not quite the same case in the Senate, where you've got some Senate Republicans basically saying, OK, this maybe is a justification to slow down and perhaps even skip what we all thought was going to be that fourth stimulus bill probably coming around July.

My sense-- my sense is-- this is a guess, since I don't think anybody really knows what's going on here. I think we probably will get a fourth stimulus bill. We will have a couple more jobs reports, remember. And, you know, we could backslide in the next jobs report or the one after that. And maybe this recovery is not quite as robust as it seems today. And even if it is, we're still in a deep hole.

So I think Congress will do more. But maybe it's not going to be that $1 trillion package we were hearing about, maybe half that.

SEANA SMITH: Yeah, and speaking of that not being off the hook yet, Akiko, a lot of this also comes down to those temporary layoffs and the number of people who were temporarily laid off falling just around 2.7 million to 15.3 million. But 15.3 million, still an extremely high number. And if some of those companies, some of those employers decide to shift their strategy and change plans, that's a lot of people that could become permanently unemployed.

AKIKO FUJITA: Yeah, and I think that's still the big question mark. I mean, to Myles' point, still important to keep in mind we're talking, you know, more than 13% here. So there are still millions of people that are out of work. You know, I've been saying this over and over. But I think a good marker will be, you know, come summer here in July when we see that-- that first tranche of the PPP loans, that 2 and 1/2 month period that these small businesses bought themselves, we're going to see if those jobs stay in place.

And I think that's still a big question mark because while we have seen the reopening process begin, small businesses especially are still assessing whether business, with the reopening, has picked up enough to keep the same kind of payroll they did before. And you know, every indication we've seen is that that's simply not the case. So while today's number is or was much better than expected, it's important to keep I think all of this in context, because things are not necessarily just bouncing back in a big way just yet.

SEANA SMITH: Yeah, that's what we've been hearing time and time again, I feel like, on Yahoo Finance today, just not to get too excited about this one massive number.

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